1. Issue of Securities – Various Modes of Funding
March 25, 2017
A presentation by:
CS Geetika Anand
AVP & Company Secretary
Aditya Birla Fashion and Retail Limited

2. Types of Securities
ROUTINE ITEMS

3. Types of Shares Shares Equity Preference Participating
Cumulative & Non- Cumulative
Redeemable
Fully or Partly Convertible

4. Optionally Convertible
Types of Debentures
Debentures
Secured
Unsecured
Non-convertible
Partly Convertible
Fully Convertible
Optionally Convertible

5. Preference Shares
ROUTINE ITEMS

6. Applicable Laws Preference Shares Cos. Act, 2013 SEBI (ICDR) Regs.
Companies Act, 2013 alongwith Rules and Regulations made thereunder (“Cos. Act, 2013”);
SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“SEBI (ICDR) Regs.”);
SEBI (Issue and Listing of Non-convertible Redeemable Preference Shares) Regulations, 2013 (“SEBI Pref. Shares Regs.”);
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“SEBI (SAST) Regs.”);
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regs.”); and
Circulars issued by RBI from time to time.
Preference Shares
Cos. Act, 2013
SEBI (ICDR) Regs.
SEBI Pref. Shares Regs.
RBI Circulars
SEBI (SAST) Regs.
SEBI Listing Regs.

7. Procedure – Private Placement of Preference Shares
Sr. No.
Steps/ Action 1
Check Capital clause in the MOA/AOA has sufficient headroom to allow the co. to issue new preference shares. If not, the Authorised Capital of the Co. needs to be increased. 2
AOA of the company should authorize the issue of pref. shares. If not, AOA to be altered by passing a Special Resolution at a general meeting of shareholders. 3
Appointment of a registered valuer to undertake valuation for arriving at the price offered for the preference shares.   4
Pass requisite resolutions to open a separate bank account under Sec. 42 of the Act for receipt of the share application money. 5
Prepare a private placement offer letter in the Form PAS-4 alongwith serially numbered application forms addressed to each person to whom the preference shares will be offered. 6
Convene a Board Meeting for:
Obtaining in-principle approval of the private placement;
Approving the notice and explanatory statement; and
Convening an EOGM to approve the said issue 7
File MGT- 14 Within 30 (thirty) days of the passing of the resolution.

8. Procedure – Private Placement of Preference Shares
Sr. No.
Steps/ Action 8
Issue notice of EOGM. The explanatory statement should inter alia contain:
size of the issue, no. of shares to be issued & nominal value/ share;
nature of shares i.e. cumulative or non-cumulative, participating or non-participating, etc.
objectives of the issue & manner of issue of shares;
price at which such shares are proposed to be issued;
basis on which the price has been arrived at;
terms of issue, including terms & rate of dividend, etc.;
terms of redemption, including the tenure, redemption premium & if convertible preference shares, then terms of conversion;
manner and modes of redemption;
current shareholding pattern of the company; and
expected dilution in equity capital upon conversion of preference shares (if applicable). 9
Hold the EOGM for approving issue of preference shares by a special resolution. The resolution should set out the following matters:
priority with respect to payment of dividend or repayment of capital vis-a-vis equity shares;
participation in surplus fund & participation in surplus assets and profits, on winding-up which may remain after the entire capital has been repaid;
payment of dividend on cumulative or non-cumulative basis;
conversion of preference shares into equity shares;
voting rights; and
redemption of preference shares.

9. Procedure – Private Placement of Preference Shares
Sr. No.
Steps/ Action 10
File MGT- 14 Within 30 (thirty) days of the passing of the resolution. 11
After the shareholders approval circulate offer letter in Form PAS-4 & application form separately to each offeree.
Note: The circulation of the offer letter and the application form separately through registered post, speed post or through electronic mode at least 3 (three) days before the opening of the issue. The offer should be open for a period of not less than 15 (Fifteen) days and not more than 30 (Thirty) days 12
Receipt of the application form from the offeree before the offer closes. 13
File the offer letter in Form PAS-4 within 30 days of circulation and maintain a record of offers in Form PAS-5. 14
Share subscription/share application money must be received by the co. in a separate bank acc. The co. is required to keep record of the bank acc. from where the money was received 15
Convene a second Board meeting for:
Issuance and allotment of preference shares ; and
Issuance of letters of allotment or share certificates in Form SH-1
Note: The allotment of preference shares should be completed within 60 (sixty) days of receipt of the share application / share subscription money (if any). In the event the company fails to allot it within the prescribed time period, the share application /share subscription money needs to be refunded within 15 (fifteen) days from the end of the 60 (sixty) days. If the share application / share subscription money is retained beyond 15 (fifteen) days from the end of the 60 (sixty) days period, 12% is payable on such money.

10. Procedure – Private Placement of Preference Shares
Sr. No.
Steps/ Action 16
Within 30 days of making an allotment of securities, the company is required to file:
return of allotment with the RoC in Form PAS-3 along with complete list of all the preference share holders, with full names, addresses, number of the preference shares allotted, valuation report and other relevant information; and
relevant board resolution(s) in Form MGT-14 with the RoC. 17
After the allotment of shares has been completed the company is required to make necessary entries under Section 88 of the Companies Act in the register of members maintained in Form MGT-1 with details of the persons who have been issued preference shares.

11. Debentures
ROUTINE ITEMS

12. Applicable Laws Preference Shares Cos. Act, 2013 SEBI EBM Circular
Companies Act, 2013 alongwith Rules and Regulations made thereunder (“Cos. Act, 2013”);
SEBI Circular dated April 21, 2016 w.r.t. Electronic Book Mechanism (“SEBI EBM Circular”);
SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (“SEBI Debt Regs.”);
SEBI (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008 (“SEBI PO Regs.”);
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regs.”); and
SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“SEBI (ICDR) Regs.”).
Preference Shares
Cos. Act, 2013
SEBI EBM Circular
SEBI Debt Regs.
SEBI PO Regs.
SEBI Listing Regs.
SEBI (ICDR) Regs.

13. Procedure – Private Placement of Non-convertible Debts.
Sr. No.
Steps/ Action 1
AOA of the company should permit the issue of NCDs.
If not, AOA to be altered by passing a Special Resolution at a general meeting of shareholders. 2
Finalize the issue size and offer price of the NCD, the investors to whom such NCDs will be offered, and execute a term sheet setting out the broad understanding between the parties. 3
Check whether the aggregate borrowing of the Co. consequent to the proposed issuance will exceed the borrowing limits of the Issuer under Section 180(1)(c) of the Act or 180 (1)(a) in the event the NCDs are proposed to be secured. 4
Intimate the stock exchange, at least 2 (two) clear days before the meeting of the board to consider the issuance of NCDs is scheduled. 5
Call a Board Meeting after giving notice to all the directors to pass resolutions w.r.t. issuance of NCDs which inter alia include the following:
Application to stock exchange for listing of the NCDs;
Obtaining the credit rating from at least 1 (one) credit rating agency;
Arrangement with a depository registered with the SEBI for dematerialization of the NCDs that are proposed to be issued to the public; and
Appointment of debenture trustee.

14. Procedure – Private Placement of Non-convertible Debts.
Sr. No.
Steps/ Action 6
Send notice of the shareholders meeting at least 21 (twenty one) days prior to the proposed date of the meeting.
Note: As per the proviso to Rule 14(2)(a) of the Allotment of Securities Rules, in the explanatory statement, the Issuer shall disclose the basis or justification for the price (including premium, if any).
Further, it may be noted that in case of offer or invitation for subscription to NCDs, it shall suffice if the Issuer passes a previous special resolution only once in a year for all the offers or invitation for such debentures during the year. 7
Appoint a registrar to the issue and execute an agreement with such registrar 8
Make an application to the any 1 of the recognised stock exchange for listing of the NCDs 9
Obtain an in-principle approval for listing of its debt securities on the recognized stock exchanges 10
Enter into an arrangement with a depository registered with SEBI for dematerialization of the NCDs in accordance with the Depositories Act, 1996 and regulations made thereunder 11
Appoint one or more debenture trustees in accordance with the provisions of Section 71 of the Act and Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014 12
Enter into the Debenture Trustee Agreement with the Debenture Trustee.

15. Procedure – Private Placement of Non-convertible Debts.
Sr. No.
Steps/ Action 13
Obtain credit rating from at least 1 (one) credit rating agency registered with SEBI. Such credit ratings shall not be from a date which is more than 1 (one) month before the date of opening of the issuance. 14
Disclosures under the Act
Deliver to the proposed subscribers, the offer letter in form PAS-4.
Within 30 (thirty) days of circulation of the offer letter, the Issuer is required to file with the ROC, and where the company is listed, with SEBI, a copy of the offer letter along with a complete record of private placement offers in form PAS-5. 15
Disclosures under the SEBI (Issue and Listing of Debt Securities) Regulations, 2008
The Issuer of listed NCDs is required to make the disclosures contained in Schedule I of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008. 16
Disclosures under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
In addition to the disclosures above disclosures, listed NCDs will also be required to comply with the SEBI (LODR) Regulations, 2015, and make the disclosures provided therein to SEBI and the stock exchange, as the case may be. 17
Convene a board meeting to allot the NCDs to the subscribers

16. Procedure – Private Placement of Non-convertible Debts.
Sr. No.
Steps/ Action 18
File a corporate action form for listing of the NCDs with the depositories for the purpose of crediting the securities in the account of the allottees 19
Seek approval for listing and trading of the NCDs at the designated stock exchange. The Issuer shall list its NCDs within a period of 15 (fifteen) days from the date of receipt of subscription monies 20
Create a debenture redemption reserve for the purpose of redemption of NCDs, in accordance with the conditions given in Rule 18(7) of the Share Capital & Debentures Rules 21
Allot its NCDs within 60 (sixty) days from the date of receipt of the application money.
If not:
shall repay the application money to the subscribers within 15 (fifteen) days from the date of completion of 60 (sixty) days.
If fails to repay the application money within the aforesaid period, it shall be liable to repay that money with interest at the rate of 12% p.a. (twelve per cent per annum) from the expiry of the sixtieth day 22
Within 30 (thirty) days of allotment of the NCDs, the Issuer shall file with the ROC, a return of allotment of securities in form PAS-3, along with a complete list of all NCD holders pursuant to such issue

17. Procedure – Private Placement of Non-convertible Debts.
Sr. No.
Steps/ Action 23
If secured, file form CHG-9 with the ROC in relation to creation of charge in favour of the debenture trustee 24
Execute a Debenture Trust Deed in form SH-12 or as near thereto as possible, within 3 (three) months of closure of the offer
RECENT REGULATORY CHANGES IN RESPECT OF ISSUE OF NCDs
The RBI, vide Circular – RBI/ /138 dated November 17, 2016 has amended Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 and key highlights are as follows:
FPIs are now permitted to invest in unlisted corporate debt securities in the form of NCDs/bonds issued by a public or private company. This is subject to
the minimum maturity of such securities being 3 (three) years, and
an end use restriction on investment in real estate business, capital market and purchase of land.
b) FPIs are also permitted to invest in securitised debt instruments. Aggregate investment by FPIs in unlisted corporate debt securities and securitised debt instruments shall not exceed Rs. 35,000 crore within the extant investment limits prescribed for corporate bond from time to time which currently is Rs. 2,44,323 crore.

18. Electronic Book Mechanism
ROUTINE ITEMS

19. Introduction – Electronic Book Mechanism
Sr. No.
Steps/ Action 1
Applicability:
all private placements of debt securities in primary market; and
with an issue size of ₹ 500 crores and above, including any green shoe option. 2
Basis of calculation of ₹ 500 crores:
If the debt securities is in tranche issuance in which each tranche issuance may be less than ₹ 500 crores but the shelf offer document, including green shoe option, is more than ₹ 500 crores in a financial year;
if the issuer comes with multiple issues in a financial year where each issue is less than ₹ 500 crores but the aggregate issue size in such financial year crosses ₹ 500 crores.
EBM is mandatory for any incremental private placement of the debt securities, where the issues takes the aggregate issue size of the issuer in a financial year to ₹ 500 crores and above. 3
Exceptions-
The issuers will have an option to follow either EBM or the existing mechanism:
issues with a single investor and fixed coupon rate. Though arrangers who are acting as underwriters will not be considered as single investor but there is no restriction on underwriters subsequently down selling the debt securities.
issues where the issue size is less than ₹500 crores, inclusive of green shoe option, if any.

20. Introduction – Electronic Book Mechanism
Sr. No.
Steps/ Action 4
Additional compliances in case of EBM - disclose coupon yield, amount raised, number of investors and category of investors to an Electronic Book Provider (EBP) and the information repository for corporate debt market as notified by SEBI 5
EBM will be provided by recognised stock exchanges with prior approval of SEBI. Currently, NSE and BSE are providing EBM for privately placed debt securities 6
Participants in EBM:
issuers who are eligible under the Listing Regulations and who have entered into an agreement with the EBP (“Issuers”);
arrangers which include SEBI registered merchant bankers, Reserve Bank of India (“RBI”) registered primary dealers or any other intermediaries as notified by SEBI and so appointed by an Issuer (“Arrangers”);
sub-arrangers which include SEBI registered brokers so appointed by an Issuer or Arrangers (“Sub-Arrangers”); and
institutional investors as defined under SEBI (ICDR) Regulations (“Institutional Investors”) which also includes QIBs.

21. Procedure – Electronic Book Mechanism
Sr. No.
Steps/ Action 1
Participants are required to enrol with EBPs and such requirement is a onetime procedure unless the enrolment is annulled or rescinded. Subsequent to this they will be allowed to enter bids with EBPs. 2
How to qualify to become an eligible participant to participate or bid in relation to a particular issue?
Only those participants who are mapped by the Issuers will be allowed to participate in a bidding process except for QIBs which will be deemed to be eligible bidders automatically. 3
Participants are required to pre-register for an issue before they are allowed to access the Private Placement Memorandum (“PPM”) or other information. Not applicable to QIBs. 4
In cases where the pre-registrations of participants (other than QIBs) exceed 200 in year, then the eligible participants to bid will be determined by draw of lots or first come first served basis undertaken by EBP in consultation with issuers. 5
Enrolment of QIBs:
No requirement of KYCs, enrolment and pre-registration. To be done directly by the EBP.
Multiple bids allowed but not consolidated bids.

22. Procedure – Electronic Book Mechanism
Sr. No.
Steps/ Action 6
Enrolment of arrangers / sub-arrangers:
Arranger or the Sub-Arranger to ensure KYC compliance of the clients on whose behalf he is bidding;
Only Arrangers and Sub-Arrangers who are mapped by the Issuer for a particular issue will be allowed to bid;
Multiple bids allowed on behalf of their clients and also on proprietary basis;
Allowed to place consolidated bids on behalf of their clients 7
Responsibilities of Arranger: Bidders are required-
to ensure that clients on whose behalf bids are placed are fully aware of the legal framework governing their participation, terms and conditions of EBPs, platform rules of EBPs, disclaimer and privacy of policy of EBPs.
to ensure that clients on whose behalf bids are placed are suitably informed about terms and conditions of PPM, risks involved in the issue, timeframe on returns, redemption, etc.
to co-ordinate with the Issuers to ensure that information pertaining to any private placement is only shared with such number of clients who have been permitted by the issuer for that PPM.
provide information to their clients in relation to any material information of the Issuer or event prior to, during, or subsequent to any private placement on EBP

23. Procedure – Electronic Book Mechanism
Sr. No.
Steps/ Action 8
Arranger /sub-arranger should ensure that adequate representations are in place in the engagement letters or agreements entered with clients. 9
Arranger/ sub-arranger to ensure following adequate disclosures and risk factors in PPM:
Failed bids because of technical reasons with EBP;
Not winning the bid because of not meeting minimum amount of bid size requirements or on account of the discretion of the Issuer;
Clients or investors being fully aware of the legal framework governing their participation, terms and conditions of EBPs, platform rules of EBPs, disclaimer and privacy of policy of EBPs. 10
Documents are required to be executed to access EBP platform for private placement of debt securities:
Agreement between Issuer and EBP to access EBPs platform for EBM. Consequently, this agreement should be a conditions precedent in relation to PPM issues above ₹500 crores;
Undertakings in favour of EBPs by Arrangers, Sub-Arrangers or Institutional Investors bidding directly, as applicable to access EBP platform.

24. Procedure – Electronic Book Mechanism
Sr. No.
Steps/ Action 11
Responsibilities of an Issuer:
Additional disclosures in the PPM:
Minimum issue size, including any green shoe option;
Disclosures in relation to price discovery methodology applied that is uniform or multiple price method applied for allotment of debt securities, if applicable
Complete information in relation to green shoe option including reasons for the retention of any excess amount; and
Upper ceiling limit in relation to coupon. 12
Green Shoe Option (“GSO”):
If open for only 1 day - the Issuer has option of indicating the exact green shoe amount;
If open substantially large and open for two or three days - the Issuer is required to mention the green shoe amount along with number of days up to which the issue will remain open. 13
Issuer to provide complete information about the issue such as size, face value, coupon, rating, green shoe option, security, guarantee, put option or call option etc. or as may be specified by EBPs.

25. Procedure – Electronic Book Mechanism
Sr. No.
Steps/ Action 14
It is mandatory for Issuers to upload PPM and optional to upload documents such as create rating rationale, consent letter from debenture trustee, board resolution etc. on EBP platform 15
Issuer cannot withdraw the issue in cases:
where the base issue is completely subscribed (in case of fixed rate issuances) and minimum issue size has been subscribed at the cut-off coupon rate as decided by the issuer for negotiations.
Once issue is accepted the issuer cannot withdraw

26. Q & A
ROUTINE ITEMS

27. Thank You!
ROUTINE ITEMS